Labour to call water summit

A clear signal was yesterday given by Labour that it would introduce a tougher regulatory regime on the privatised water companies if the party wins power. In an attempt to turn growing fears of a summer drought crisis into an election issue, Frank Dobson, Labour's environment spokesman, pledged to call an immediate post-poll industry summit on water shortages.

Mr Dobson said: "On taking office Labour will convene an immediate water summit to thrash out what needs to be done in both the short and long term. We will bring together the water companies, the water regulator, the Environment Agency, together with consumer and environmental groups."

He outlined a 10-point list of measures as several water companies are already warning of the possibility of a drought. Rainfall levels for much of England and Wales in March were negligible, while temperatures this month have been abnormally high. In London there has been no significant rain since February.

At the top of Labour's agenda is a move to "set and enforce tough mandatory leakage targets," though it was not clear last night whether these would go beyond those already set by Ofwat, which several water groups have found hard to match. Leakage rates in England and Wales in 1996 were around 29 per cent.

Leaked internal documents from Thames Water last week revealed the company was fighting with Ofwat over criticism of its record on water wastage. Ofwat ordered Thames to report on its leakage reduction measures every three months, the only one of the water companies to have to do so.

Other Labour policies include a free leakage repair programme for households, a service currently offered by only a limited number of the water groups. Some offer a service for a fixed fee, which averages about pounds 100. Surveys have shown a large proportion of leakages are in pipes from the street to the front door. Labour would also require water firms to give free efficiency audits for homes and publish leakage levels in the local press.

The industry is already fighting plans by Ofwat, the industry watchdog, to impose substantial one-off price cuts on the 10 privatised water and sewerage companies after 2000. Ian Byatt, the regulator, has indicated he is likely to make the kind of substantial reduction seen in the gas and electricity industries unless tougher environmental rules are imposed from Brussels.

Ofwat declined to comment on Labour's proposals. "We cannot make any comments during the election period," a spokeswoman said. However, she said Mr Byatt was likely to receive a detailed document from Yorkshire Water examining "economic levels of leakage" next month which could have wider implications. Ofwat also said that industry summits were not a new idea, and had been held following the 1995 drought.

Water shares, however, were boosted by City speculation that Labour's windfall tax less than previous market estimates.